An Analysis of the 2022 Indian Competition Amendment Bill

Competition law (“CL”)/Merger Control Regime was the first act that governs anti-competitive practices, it was brought and drafted because of the shortcomings of the Monopolies and Restrictive Trade Practices Legislation (“MRTP”) and it also established the regulatory authority that will adjudicate the disputes regarding adverse effect on competition in any sort of market CL i.e. Competition Commission of India (“CCI”), but it also does not limit the rights of party by giving them right to appeal against the order passed by CCI in an appellate tribunal that was later established through the Competition Amendment Act, 2007 i.e. Competition Law Appellate Tribunal (“COMPAT”), now known as National Competition Law Appellate Tribunal (“NCLAT”)

OVERVIEW

CL is the legislation that is intended to prevent anti-competitive practices which could lead to distortion in the market on the part of businesses. The basic objective of the CL is to maintain free and fair competition and prevent market distortion caused by anti-competitive practices/arrangements.

This bill was introduced in the Lok Sabha (“LS”) on August 5, 2022 but it could not get its approval just like almost all bills but LS referred the bill to Standing Committee on August 17, 2022 and then the standing committee investigated the bill and amended the provisions the committee found necessary to be amended and gave its report on 13^th December, 2022 and finally on 29^th march LS agreed with the amendments recommended by the standing committee passed the Indian Competition Amendment Bill on 29^th March, 2023.

IMPORTANT POINTS OF THE BILL-

1. The bill wants mergers and acquisitions under competition law to be to be regulated based on the value of transactions. Also, the bill recommended reducing the time given to the commission to pass orders related to such transactions, the earlier time period given was 210 days while the bill recommended it be changed to 150 days.
2. The bill recommended expanding the scope of entities that can be presumed to be Anti-Competitive under section 3(3) of the Competition Act, 2002 by including the enterprises that are not engaged in similar or identical business.
3. The bill recommended de-criminalize some of the offences mentioned under competition act regarding anti-competitive practices and abuse of dominant power by amending the power of punishment given to CCI from imposing of fine to civil penalties.
4. The bill recommended introduction of a concept of limitation period which was earlier not there in the Competition Act, 2002.

KEY CHANGES PROPOSED IN THE BILL-

1. Deal Value Thresholds (“DVT”) – Already there was an existing value of asset and turnover based thresholds that was mentioned in the Competition Act, 2002 this bill proposed a new DVT to be introduced with the already existing threshold. This concept of deal value threshold was proposed under which any transaction of acquisition or merger that amounts to or crosses Rs 2000 crore would not be completed unless they take prior approval of the CCI.
2. Changes in Review Timeline – The bill proposed to change the time period of review the transactions related to mergers and acquisitions, the earlier timeline was for phase 1^st, it was 30 days and for overall investigation and passing order was 210 days, the changes that were proposed in this bill was for phase 1^st to shorten it to 20 days and for overall shorten it to 150 days.
3. Stock Market Purchases– The stock market purchases come under the ambit of the transaction and all the threshold provisions were also applied on them. This bill proposed to give exemption to stock market purchases to comply with the standstill obligations of the competition law. The amendment suggested allowing the acquirer to file a subsequent notice but he will not be able to exercise any of his rights until receipt of CCI’s approval.
4. Increase in Penalty– The bill also recommended to increase the penalty in the case when the party makes omission or submit false statements to CCI, the bill proposed it to be increase to Rs. 5 crore from the existed Rs. 1 crore Penalty.
5. Hub & Spoke Cartels– The bill also recommended to insert a specific provision related to Hub & Spoke cartels that will include the cartels made between entities that are of different levels of supply and distribution chains. It would allow CCI to adjudicate such type of cartel cases also on the rule of presumption.
6. Leniency – The bill recommends/proposes two important changes related to the leniency regime under CL, the first change that was recommended was that the CCI should allow the party to withdraw its leniency application and no wrongdoing would be done to the party just for withdrawing the application and CCI can still use the information for the purpose of investigation.

The second change proposed by the bill related to leniency regime was to give discretion to the CCI to grant more leniency if the party gives some important information that lead to disclosing another earlier undisclosed cartel.

KEY TAKEAWAYS

The bill proposed many needed and some not needed changes, major of the changes that were proposed by the bill were aiming at increasing the efficacy of merger control regime of India, the DVT recommendation could come very handy because it would limit the entities that were earlier easily avoiding the scrutiny of getting into trouble while the changes in review timeline could be very hectic for the commission as the earlier mentioned period is not very long period, while some changes could easily help a lot in lessening the burden of the commission such as the proposal of commitments and settlements and addition of Hub & Spoke cartel in the ambit of 3(3) would shift the burden of CCI to these cartels. The overall analysis is that the recommendations of the bill are good but can be amended a little bit and some recommendations need to be removed, this bill overall would be a big step in the developing field of CL in India, and this bill would act as a revamp for some of the shortcomings of the Competition Act, 2002.